Home Building Trend Continues….

“Davidson” submits:

The US Census Bureau released the March New Residential Construction Report: New Residential Construction (March 2013).pdf. The response has been generally positive as the gross number of housing starts which includes multi-family and single-family housing rose ~7% to 1,036,000 units. The March 2013 Single-Family Starts was reported at 619,000. While the media is a twitter at the monthly gross rise, what truly matters in my opinion is the trend in Single-Family Starts which reflects the not only financial strength of individuals to buy homes but bank’s willingness to lend to individuals as opposed to corporations. The lending to individuals remains relatively tight but has been loosening a little as economic activity continues to accelerate. Net/net everyone feels better including lending officers.

Lost in the reporting today is the fact that Feb 2013 was raised from the initial report of 618,000 to 650,000, a gain of 32,000. This adjustment to the earlier report maintains the trend of Single-Family Starts(RUST COLORED LINE) in place since Oct 2011 as can be seen in the chart below and affirms my ongoing comment that it is not the month-over-month which provides support for an current investment outlook, but the trend of multiple data series which is most important.

In the next few days the Monthly Supply of New Homes for Sale will be released. Recent reports of 4mos-5mos supply imply strong demand for Single-Family Home Sales. History indicates that we should expect the next report to remain in this range as the housing market activity still remains in the early stages of what is typically a multi-year cycle. History also suggests we could experience 5yrs of rising housing market activity. Housing activity contributes favorably to general employment and in turn to equity prices.